Section 4: Audit Coordinating Responsibilities

Introduction

Chapter 783 of the Texas Government Code, known as the Uniform Grant Management Act, provides for local governments to request and receive a single audit or a coordinated audit. A portion of this act, Section 783.008, “Audit Conditions,” states as follows:
“(a) To avoid duplicate audits and unnecessary audit costs, a local government receiving state-administered financial assistance may request by action of its governing body a single audit or coordinated audits by all state agencies from which it receives funds.
(b) On receipt of a request for a single audit or audit coordination, the Governor’s Office, in consultation with the State Auditor, shall, within 30 days, designate a single state agency to coordinate state audits of the local government.
(c) The designated agency shall, to the extent practicable, assure single or coordinated state audits of the local government for as long as the designation remains in effect or until the local government, by action of its governing body, withdraws its request for audit coordination.
(d) This section does not apply to audits performed by the Comptroller of Public Accounts or the State Auditor.”

Purpose

The State Single Audit Coordinating Agency is to ensure that an adequate single audit or coordinated audit is provided to the requesting agency. The resulting benefits should include improvement in:
  • Utilization of resources.
  • General audit coverage.

Procedures

As outlined in the statute referenced above, when the Governor’s Office designates TxDOT as the State Single Audit Coordinating Agency, TxDOT is responsible for:
  • Coordinating with the local government or nonprofit entity, the independent auditor, and the state funding agencies to ensure that satisfactory audit coverage is provided in a timely manner and in accordance with the provisions of 2 C.F.R. Part 200.
  • Coordinating and being aware of audit schedules for recipient organizations and providing advice to assist the recipient in the initial engagement of an auditor.
  • Reviewing reports and audit organizations, accomplished through quality assessment, quality control, or desk reviews.
  • Addressing matters during the desk review of audit reports, including:
    • Ensuring that financial statements of the entity fairly present its financial position and results of financial operations in accordance with generally accepted accounting principles.
    • Providing unqualified opinions on General Purpose Financial Statements (GPFS).
    • Providing a statement on internal accounting controls affecting GPFS.
    • Producing a compliance report based on examination of GPFS.
    • Ensuring that the entity has internal accounting and other controls in place to provide reasonable assurance that it is managing its federal programs in compliance with applicable laws and regulations.
The state single audit coordinating agency should ensure that all audit reports of recipient organizations that affect state grantor agencies are received, reviewed, and distributed to appropriate audit officials.
Grantor audit agencies are responsible for establishing and maintaining follow-up systems to ensure that audit findings applicable to their agency’s programs are resolved.

Substandard Reports

The Inspector General Act of 1978 requires that appropriate steps be taken to ensure that any work performed by non-federal auditors complies with the standards established by the U.S. Comptroller General. This is accomplished by the performance of desk reviews or an audit work paper review of audit reports submitted by independent auditors, or both. As a result of these reviews, it may be determined that the auditor did not comply with standards as established by the U.S. Comptroller General or other appropriate professional standards. The auditor’s non-compliance with the standards may warrant a referral to the appropriate sanctioning or licensing authority.